What is your ideal turnkey property?

Question

What is your ideal turkey property?  What would the have to have to call it a “turnkey” property in order to purchase it?

Sam Lewis · Answer

This is seriously a great question and is not asked enough. The classic "it depends" will play a lot here based on the investor's goals and financing options available.

For an investor with a growth mindset, a great turnkey would enable steady cash flow, minor repair work (if any), and little cash stuck in the deal. With a growth mindset we'd want our money to keep working for us. In this case, a turnkey property would ideally have an option for the buyer to go about seller-financing with positive cash flow.

I analyzed a duplex today and almost made an offer, however the seller would not consider seller financing. Since the turn-key property was already fixed up and was not offered at a major discount, the numbers met the 1% rule but unsurprisingly, did not offer enough wiggle room for a potential refinance or cash-out down the road.

In this case, it did not meet my criteria to meet a turnkey property. I would have had to put roughly 20% down (plus closing) on a 220k duplex to achieve a cash flow of roughly 800-900 per month. This may be great for a hands-off investor looking to put money to work who is simultaneously okay with leaving cash in a deal, achieving a slower rate of growth and cash on cash return.

A common theme in making a turnkey property is (1) the financing available and (2) the growth-minded goals for the investor.